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3-Step Success Formula for Medical Practice Annual Review

eGuide

The practice annual review. Something independent practice owners almost universally recognize as a priority. But how do you effectively assess the health of the business side of your practice, and spot and treat issues almost certainly lurking somewhere in the numbers?

Beyond required year-end financials and taxes – and reviewing a few key numbers – what does an effective yearend review look like?

Annual Review 3-Step Success Formula

In simple terms, you need to understand three important things about your practice: 1) the current state of your clinic business: 2) where it’s headed (and how fast): and 3) whether it’s fulfilling its core purpose. We call it look at the pics, watch the movie, and ponder the plot.

This three-step formula provides a framework to assess these three important aspects of your practice, covering all the key items that require your scrutiny, without getting bogged down in detail overload.

LOOK AT THE PICS, WATC H THE MOVIE, PONDER THE PLOT

3 – Step Succes s For mula f or Medical P rac t i ce A nnual Review

The practice annual review. Something independent practice owners almost universally recognize as a priority. But how do you effectively assess the health of the business side of your practice, and spot and treat issues almost certainly lurking somewhere in the numbers? Beyond required year-end financials and taxes – and reviewing a few key numbers – what does an effective yearend review look like?

Annual Review 3-Step Success Formula

In simple terms, you need to understand three important things about your practice: 1) the current state of your clinic business, 2) where it’s headed (and how fast), and 3) whether it’s fulfilling its core purpose. We call it look at the pics, watch the movie, and ponder the plot.

This three-step formula provides a framework to assess these three important aspects of your practice, covering all the key items that require your scrutiny, without getting bogged down in detail overload.

STEP 1

LOOK AT THE PICS: THE SNAPSHOT

The first step is to measure your performance for the year against your key performance indicators (KPIs) and/or other key metrics. Experience has shown that

a practice should have 10-15 metrics that measure all key areas of your practice’s business performance. Additional

sub-items can be tracked under each, including for key personnel. But strong focus on a small number of KPIs is actually optimal for managing and directing a successful practice.

The exercise here is to assess current practice performance compared to the KPI created a year earlier, or in financial lingo, actual vs. goal. Essentially, we take a

snapshot of the status of the practice today and compare it to what we expected it to look like in twelve months.

For the practice overall: Evaluate each KPI and look for gaps. Underperformance on any measure provides the opportunity to not only identify roadblocks that contributed to the shortfall, but to brainstorm ways of improving performance going forward.

For key individuals: Evaluate performance against their KPIs. This would apply primarily to people who have a major direct impact on practice performance, such as providers or those tasked with managing costs, efficiency, personnel, etc.

In each case:

  • Require accountability. This should be an un-emotional review of

    just the facts.

  • Jointly identify areas for improvement. Especially pay attention to areas of strength that aren’t being fully utilized.

BENCHMARKING

The final task is to compare your practice performance snapshot with industry standard benchmarks. It’s important to know how you are doing relative to the best and the worst practices like yours out there, so you aren’t planning in a vacuum. This helps answer key questions like:

  • Are our KPIs reasonable?

  • Are other practices on average underperforming in the same areas we are?

  • Where do we need to focus to make sure we attract and retain top talent?

  • Do patients view us as positively as other similar clinics?

    Several sources are available that can provide benchmarking data:

  • MGMA annual surveys

  • AMGA surveys

  • Your accountant or financial advisor may have other practices in their portfolio that can provide reference points anonymously.

    CELEBRATE SUCCESS

    Remember that the evaluation process has two sides. Focus on shortfalls and improvements is obviously crucial. By the same token, this is a time to also celebrate successes and recognize the hard work and sacrifice of your team in contributing to meeting or exceeding goals. Use this prime opportunity to strengthen morale and loyalty by recognizing team and individual contributions.

    NEED KPIS?

    If you don’t currently have KPIs for your practice, or they are a bit squishy, this is a good time to create a solid core

    of KPIs to guide the practice for the year ahead. These references provide detailed information on setting KPIs for independent practice:

  • Private Practice KPIs: 12 Data Points that Impact Revenue

  • KPIs For the Independent Practice

    STEP 2

    WATCH THE MOVIE

    After evaluating the snapshot of your annual performance, the next most important step is to analyze trends, or watch the ‘movie’ of how the data is shifting over time. You are looking to answer questions like:

These references may be helpful in your analysis: Directional Drilling Practice Financials

Don’t Try This Outside the All-in-one Cloud

This level of analysis requires a rich dataset that crosses all areas of the practice. A unified, cloud-based, all-in-one practice automation system with advanced reporting capability is crucial to provide this depth of insight. Pulling data from disparate systems creates a barrier many practices are unable or unwilling to surmount to complete a meaningful annual review. See this reference for details on the AdvancedMD cloud-based all-in-one automation suite with advanced reporting.

STEP 3

PONDER THE PLOT

Beyond the numbers, take time to consider how your practice is fulfilling its core purpose in the lives of the owners and staff.

As an independent practice owner, you have much more control over the direction and purpose of your practice. This is the time to step

back and evaluate how your life goals and balance are being met in the current practice scenario and forecasted direction.

Take time to ponder deeper questions such as:

  • Are you enjoying the life balance you expect?

  • Are you receiving the compensation you desire?

  • Are you finding time for the most fulfilling professional work you need for high satisfaction?

  • Are there altruistic goals for the practice that aren’t being met or considered?

At the end of the day, independent practice is about fulfilling in the best way possible the aspirations of the owners, the team you work with, and the patients you serve. Adjusting direction to ensure you are on track to fulfill those dreams could be the most important part of

the review exercise.

Acknowledgment

Christine Duncan

Group Product Manager, AdvancedMD

As Group Product Manager for AdvancedMD, Christine Duncan leads product development for the AdvancedMD practice management, reporting, and in-application suite of products.

SNAP, WATCH &

PLOT ANNUAL SUCCESS

Rather than dreading or avoiding it, the annual practice review can become the most anticipated event in your practice year. With a solid three-step approach and the right data tools on your side, you are poised for year after year of independent practice success.

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Topic: Business, Medical Billing, Patient Experience | Content Type: eGuide

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